MOG and Lala

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This is Celia Hirschman with On the Beat for KCRW.

If I can hear something right now, why would I want to wait?

Instant gratification is quickly becoming the demand of the digital music culture. And streaming music may well be the wave of the future. With blessings from the four major label conglomerates, streaming companies offer a comprehensive library of music that connects to consumers instantly.

Streaming is not down-loading. You don't own the song, as you would a download, you simply listen to it from 'The Cloud.' The Cloud is a poetic way to describe a centralize storage system of music that you access from the web. Napster, Rhapsody, Pandora and Grooveshark have been offering streaming audio for years.

But in the last few days, a couple of strategic changes have shifted the marketplace significantly.

MOG is a music discovery and blogging site developed out of Berkeley, California. Last week, MOG announced a new $5 a month streaming audio service with access to over five million songs, including all the majors and many of the indies.

MOG's business strategy is to offer subscription streaming services with taste-maker editorial. One of their most promising features is a 320-kilobyte streaming rate which is far superior to most comparable services.

And while there's still no US launch date set for Spotify, the beloved European streaming service, the CEO has announced they will launch in early 2010. Most executives feel that when Spotify launches here, it will give all the other streaming services a run for their money.

But perhaps the most important question is – where does iTunes fit in all this? ITunes is a download service. Their streaming previews are 30-second bytes of songs, to whet the appetite of the consumer prior to purchase. If consumers decide that streaming is more relevant and cost-effective than downloading, what happens to the number one digital retailer?

Apple seems to have felt the pressure of that question.

Last week, they bought the music streaming service Lala.

As is their way, Apple has remained mum about the details of the deal. Estimates run from a $17 million fire-sale bid, to an $80 million dollar buy-out. I believe the numbers are closer to the former than the latter. But either way, it doesn't take much to understand why Apple would have an interest in Lala's cloud based technology. The service allows users to stream any song as many times as they want for 10¢ from their cloud. Compare that to a 99¢ download on iTunes and you see why Apple is concerned.

Add to that equation the remarkable growth of the streaming services like Pandora and Rhapsody made infinitely more popular through iPhone applications.

And finally, Lala's strategic partnership last month with Google for music search cements Lala's significance. By acquiring Lala, Apple is positioned right in the middle of the streaming business, with little to no effort.

That's playing all sides of the game.

This is Celia Hirschman with On the Beat for KCRW.